Fixed price or time and materials: how to choose for each job

The same job can be priced two ways. With a fixed price, you announce a firm figure and stick to it, whatever happens. With time and materials, you bill the hours actually worked and the materials actually used. Neither is better in general: each suits a different kind of job, and picking the wrong one costs you either your margin or the client's trust.

Fixed price: a firm figure, a risk for you

With a fixed price, the client knows the cost at signature. That reassures them, and it often wins the job.

The risk sits with you. If the job takes two days longer than planned, those two days are on you. If you finish faster, the difference is yours too.

Fixed price works well when:

• you have done this kind of job many times;
• the existing structure is visible and sound;
• quantities can be measured before you start;
• the client is comparing several quotes and wants a clear number.

Time and materials: real time, a risk for the client

With time and materials, you bill hours at an agreed rate, plus materials at an agreed price. The client does not know the total in advance; they pay for what was actually done.

Your margin is protected, but the client may worry about an open-ended bill. To win their agreement, you need transparency.

Time and materials works well when:

• the condition of what you will open up is unknown (old walls, hidden pipes or cables);
• the client has not yet decided exactly what they want;
• the job is a small repair that is hard to estimate;
• the job is fault-finding.

Side by side

Combining both on one quote

The most useful answer is often a mix. Take a bathroom refit in an old building:

• fixed price: removal of old fittings, installation of shower tray, basin and toilet, tiling on a measured area;
• time and materials: any repair to the waste pipes, whose condition will only be known once the old fittings are out, with an indicative cap: "estimated at 4 to 8 hours; beyond that, client approval required before continuing".

The client gets a firm price for most of the job and a clear limit on the uncertain part. You are protected on the part nobody can predict.

Making time and materials acceptable

Three habits make it much easier for clients to agree:

1. 1State the hourly rate and material prices on the quote before you start.
2. 2Keep a dated log of hours and materials, and attach it to the invoice.
3. 3Warn the client before exceeding the estimate, rather than letting them discover it on the invoice.

The rate itself must cover all your costs: see our guide to setting an hourly rate.

Protecting a fixed price

A fixed price is protected in writing. Describe precisely what is included and what is not. State your assumptions: "price based on sound surfaces; any repair found once the old finish is removed will be quoted separately". For materials, check your markup with our article on materials markup.

Summary